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Valero Energy Corporation Message Board

  • gordin_gekko gordin_gekko May 2, 2013 11:01 PM Flag

    cst cost basis

    Anyone know how to account for the cost basis? Wanted to update my tax spreadsheet for when I sell either VLO or CST in the future. Thanks.

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    • ah673000 May 3, 2013 5:52 AM Flag

      $30.20 / share

    • Ignore what people are reporting from their brokerages (the brokerages are pulling those numbers from first day trading). CST cost basis is 1/9 of original cost basis for VLO shares. VLO cost basis is reduced by that amount. For example, if you bought VLO shares for $36, your CST cost basis is $36 / 9 = $4. Your VLO cost basis then drops to $32.

      • 2 Replies to aviacionado
      • Don't ignore the brokerage-reported cost basis. It may be wrong but will reduce your tax liability if reflected on the 1099 they issue, unless you are audited or your conscience bothers you. Taxpayers are responsible for correcting 1099 reporting errors in calculating their tax liability but must obtain a corrected 1099 from the brokerage if the error is in the taxpayer's favor and reported correctly by the taxpayer on Form 1040 Schedule D (or a desk audit - or worse - is guaranteed).

        By the way, the holding period for CST shares in determining capital gain liability is based on when you bought your VLO shares.

      • I think you are correct in that one's cost basis is a percentage of what he paid for his shares. But I do think that, based on your method, CST cost basis is 1/10 of the original basis for VLO shares. ( If you had 9 shares, you now have 10, of which CST is one.) That would make CST 10% of the original VLO cost.

        I will probably use the 8.25% CSI cost allocation proposed by Valero and maintain a copy of IRS Form 8937 (from website) for my tax records. I think you can use any logical method to allocate the cost basis, as long as you are consistant.

    • john.vigent May 3, 2013 7:58 AM Flag

      Fidelity says 31.83. If you use them, tha will be what is used to calculate any taxable gains, if you use their automatic year-end download.

      • 1 Reply to john.vigent
      • The information should be given clearly on the VLO website. I expect VLO will get around to it within a lazy week.. Fidelity should follow. If you do searches that include "private letter" as a search term, you will see that this should be a tax free event (except for CIL) for those in the US. Your basis should be proportioned. I would wait until your broker gets this squared away and after you get any CIL to pick a basis.
        There is more than one way to allocate your basis. The popular one with companies is to use the average of the high and low on the first day of trading in the calculations. You could do your own calculations, but those might vary a bit from what your broker comes up with. Unless your broker blows it, go with the flow.

    • Here is the Cost basis from Valero's website. This is assuming you had purchased Valero (pre-spin) at $30 per share and 100 shares:

      As described in the IRS Form 8937, for U.S. tax purposes, the allocation of tax basis between shares of VLO common stock and CST common stock is based on their relative fair market values (FMV) at the time of the distribution. There are several possible methods to determine the FMV of VLO and CST common stock. Shareholders should consult with their tax advisors. One approach may be to use the unadjusted averages of the high and low trading prices of VLO and CST common stock on the New York Stock Exchange on the first day of regular-way trading after distribution. Such averages were $36.60 for VLO and $29.60 for CST on May 2, 2013. If this method is used, the pre-distribution tax basis in VLO shares would be allocated 91.75% to VLO shares and 8.25% to CST shares. See the example below which assumes pre-distribution tax basis of $30 per share in 100 shares of VLO common stock:

      Number of Shares After Distribution
      Average NYSE Trading Price on 5/2/13
      Total FMV at 5/2/13
      Percentage of Total FMV at 5/2/13
      Allocated Tax Basis

      VLO Common Stock
      (91.75% of $3,000)

      CST Common Stock
      (8.16% of $3,000)

      CST Common Fractional Shares
      (.09% of $3,000)


    • Valero's recommended calculation is now on the website.

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